China’s interest rate cut is weighing on crop futures. Thursday’s export news was quite supportive of the corn and soy markets and powered sizeable gains. However, the crop markets are suffering a relapse in the wake of early-morning news that China’s central bank is cutting interest rates. That implicitly lowered the value of its currency and boosted the U.S. dollar, and reduced the potential for export sales to that county in the short to intermediate term. December corn futures slipped 2.0 cents to $3.7125/bushel Thursday night, while May lost 2.25 to $3.9275.
Asian palm strength seems to be supporting soybeans and oil. Given its voracious appetite for U.S. beans and meal, the overnight China move and the dollar reaction suggests reduced exports to that country in the near future. However, Asian palm oil prices sustained their recent rally last night, thereby seeming to support both soyoil and bean futures. January soybean futures rose 2.25 cents to $10.2275/bushel early Friday morning, while December soyoil advanced 0.33 cents to 33.00 cents/pound, but December meal skidded $0.4 to $370.4/ton.
The wheat markets also slumped in early Friday trading. The China news and surging value of the dollar apparently weighed on wheat futures as well. Although wire service stories once again mentioned cold weather threats to Russia’s winter wheat crop, the fact that wet and warm conditions will prevail over the central U.S. this weekend isn’t helping the bullish cause. December CBOT wheat fell 5.25 cents to $5.42/bushel just before dawn Friday, while December KC wheat sagged 3.5 cents to $5.9875/bushel, and December MWE wheat dipped 3.5 to $5.81.
Cattle futures traded mixed Thursday. Despite strong fundamentals and wintry weather in mid-November, as well as another rise in cutouts, the nearby cattle contracts dipped yesterday. Conversely, deferred futures still seemed to reflect the potential for persistent strength through much of 2015. Nearby futures traded weakly in late GLOBEX action. December live cattle futures dropped 0.57 to 170.25 cents/pound at Thursday’s close, while April futures gained 0.10 to 170.30. Meanwhile, January feeder cattle futures plunged 1.52 cents to 235.57 cents/pound, and March feeders plummeted 1.60 to 233.72.
Pork weakness again undercut CME hogs. Although cash hog prices had recently edged upward, pork quotes have remained under considerable pressure. Wednesday’s late news to that effect triggered strong Thursday selling. Conversely, talk of a modest kill this week may have limited losses. Thursday’s late pork reports look supportive of today’s opening. December hog futures dove 1.00 cent to 90.77 cents/pound as Thursday’s pit session ended, while April hogs tumbled 0.85 to 92.75.
Other Chinese news is boosting cotton futures. Talk of a weaker Chinese currency and a strong dollar is also negative for cotton export prospects and prices. However, Chinese officials also announced last night that their shift in cotton support policies had cut planted acreage by 15.7%, which significantly exceeded previous estimates. Cotton futures are rallying as a consequence. December cotton climbed 0.90 cents to 59.44 shortly after the New York sunrise, while March futures surged 0.83 cents to 59.69.